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It was a frustrating Monday on the ASX as investors confronted a technical glitch that periodically enabled share trading before freezing it again.
After a 90-minute delay to the start of trade, blocks of stocks slowly came online before the market froze again in the afternoon and trading was abandoned completely shortly after 2pm, marking the biggest disruption since the exchange shut down for four hours in October 2011.
Investors largely kept away from the dysfunctional market, though gains were posted in financials, materials and utilities sectors. Only $169 million worth of trades were recorded for top 200 stocks, against a 90-day average of around $600 million.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index closed a handful of points lower to 5294.8 points and 5393.9 points respectively.
“It’s been extremely frustrating but it’s fortunate today was going to be a low volume, not much news around kind of day,” said Chris Weston, chief market analyst at IG Markets.
“There’s not much corporate news around, so all in all it’s a good day for the market to be down, there really wasn’t much happening.”
Of the trades that got through, buying happened in the form of gold mining stocks as spot gold prices moved higher on Monday. Newcrest Mining was among the day’s performers, closing 2.5 per cent higher after announcing the sale of its 50 per cent stake in its Hidden Valley joint venture to partner Harmony Gold Mining. After also offloading its 50 per cent interests in three nearby exploration tenements to Harmony, it expects to book a loss of about $13 million.
Markets around the region traded higher thanks to an improving oil price. Venezuela hinted that OPEC and non-OPEC are close to reaching an output-stabilising deal, while in Libya raised concerns that efforts to restart crude exports there could be disrupted. Santos shares lifted 3.2 per cent to $3.16 after being upgraded to neutral at Goldman Sachs and to buy at UBS. It also announced the appointment of new chief financial officer Anthony Neilson.
Financials were mixed, with Commonwealth Bank of Australia down 0.04 per cent to $72.21, while Westpac Banking Corporation fell 0.07 per cent to $29.57. ANZ Banking Group was the best of the bunch, adding 1.2 per cent to $26.67, while National Australia Bank rose 0.07 per cent to $27.08.
The Nikkei was closed on Monday for a holiday and broadly investors were cautious ahead of US and Japanese central bank meetings later this week.
The technical problems plaguing the ASX overshadowed the trades that were able to be executed. Trading began at 11.30am but trades took longer than usual to be processed and those made within a 43 second window ahead of the open were cancelled. Trading was again halted about 2pm, and was later closed for the day, without a closing price auction.
The investment banking and financial services group reaffirmed its flat 2017 profit guidance in a speech by finance chief Patrick Upfold posted to the ASX. Mr Upfold said profits for the six months ending September 30, its first half, would be “broadly in line” with its second half last year. The company posted a 7 per cent rise in net profit to March 31 to $933 million. Macquarie will report its interim results in October. Macquarie shares fell 0.2 per cent to $81.25.
Brent crude prices bounced on Monday after reports emerged that Venezuelan president Nicolas Maduro said a deal may be announced this month to stabilise oil markets. In late trade the commodity had jumped 1.7 per cent to $US46.53 a barrel after falling into the weekend. Meanwhile, clashes in Libya stopped its first cargo of oil in two years from leaving port, signalling a disruption in exports.
RBA inflation target
Treasurer Scott Morrison on Monday reaffirmed the government’s memorandum of understanding with the Reserve Bank and its inflation target band of between 2 and 3 per cent. Mr Morrison said he and new governor Philip Lowe agreed no changes needed to be made to the MoU, despite calls for changes to the inflation target. The Australian dollar enjoyed a strong session, climbing from US74.8¢ to US75.4¢ through trade.
Stock watch: AGL Energy
RBC Capital Markets moved from “underperform” to “sector perform” following the substantial de-rating of the stock. AGL has fallen 16 per cent since its 12-month high of $20.77 in early August, and last fetched $17.16. Shaw & Partners raised the stock from “hold” to “buy”.
In a note to clients, RBC analyst Paul Johnston said he saw near term upside for AGL’s share on a supportive macroeconomic backdrop and reasonable earnings growth. Johnston lowered the target price from $18.50 to $18, however, saying despite the near term positive outlook, longer term challenges would weigh on the stock.
The closure of Alcoa’s Portland smelter is a “real risk”, Johnston said, which will hurt energy suppliers including AGL “We believe a -$20/MWh move in the power market is possible causing a negative and similar sized reduction in AGL earnings,” he said.
The debates around climate change policy are also not going in AGL’s favour, Johnston added. Five analysts on Bloomberg have a ‘buy” rating on the stock, while two have a “sell” and five “hold”.
The story ASX flat as index shuts early in day marred by glitches first appeared on The Sydney Morning Herald.